The Fed got this one completely, 100% wrong. Total FAIL. This December 2004 study of the housing market is a reminder that the same people exerting almost total, unaccountable control over our monetary policy, are the same people who produce studies like this.

This paper has plenty of charts, regression analyses, hedonics and endnotes. All absolutely worthless.

Basic findings:

A "close analysis of the U.S. housing market" finds little basis for concerns about a steep decline in home prices

The rise in home prices is driven by fundamentals, not speculation (this time it's different)

Weaker fundamentals are unlikely to cause home prices to drop steeply on a nationwide basis

Any decline in home prices is unlikely to have serious ramifications for the broader economy and "is unlikely to plunge the U.S. economy into a recession."

This is obscene. We have crossed the point of needing a Revolution to clean house of ineptitude alone.

Didn't the NY Fed also co-author a piece with MIT explaining that the entire rationale for TARP was nothing but a pack of lies? And didn't that paper confirm the thesis of Minneapolis Fed's Working Paper #666 [I shit you not], which posited that the entire TARP rationale was nothing but a pack of lies?

If that was the state of delusion in the Fed at the time then it must have now reached new heights with Quantitative Easing - bit like giving a dead man more and more drugs in the futile hope that he will rise form the dead. String out the illusion until the point it all collapses - not of these people will be done for their crimes. You are more likely to be sent to prison in the US for stealing bread and not for wiping out billions of dollars of wealth while pocketing millions.

We have the same deluded fools in Australia regarding housing - same stupid rubbish - we are different, decline in house prices will not impact the economy, the fundamentals are sound, we have houses that are built differently to those in the US, all sound fundamentals and no speculation, the banks are sound......etc.

Cheyenne, DB, I'm reading it's going both ways, many country's ships won't dock in Japan. So their imports are partly cut off, their own food is contaminated, how many energy plants shut down? I fear it could get awful bad for them...